What Jumps Out : The New Normal

You would have to go a long way to find another index like the one published over the past few days – an index that suggests Colombia and Pakistan are the only two ‘normal’ countries in the world, or alternatively pick up the latest copy of The Economist.

The publication has for some months been studying the return to ‘normal’ or ‘new normal’ as we now like to call it, the survey looks at three broad areas:

• Transport and travel, combined with congestion in the major cities.
• Recreation and entertainment, the amount of time spent outside of the home at the cinema, sports events etc.
• Retail footfall and office occupancy.

When looked at in these terms, Colombia, with a score of 108.5 (+6 over the past two weeks alone) is considered the most normalized country in the world. It is followed by Pakistan (107.1) – they are the only two countries above 100 which is the ‘normal’ threshold.

Latin America has had a good fortnight with Brazil (+6.6) and Argentina (+3.2) also among the top 10 risers, whilst others, especially in Europe (Austria -12.4, Holland – 11.9) falling away dramatically.

Overall the world stands at 76 with retail (104) being the only area globally scored as ‘normal’ among the 50 countries surveyed, Sports Events and Cinema (both 28) are a major laggard.

Another weak area globally is flights (45) however Colombia’s snap-back has been so dramatic that even Avianca was caught out by the competition from Latam and Viva Air and is still struggling to claim back lost market share.

Now comes the part where I say ‘I TOLD YOU SO’. I won’t thumb through posts and emails from 12 months ago, but it was clearly stated that Colombia despite the hardship of the pandemic would be back at the races faster than anyone expects – and it is.

To paraphrase: ‘Countries such as Colombia have seen it all before, it is populous and has a history that is defined by hardship, the people are used to suffering and are adept at finding a way back’

And this is exactly what has happened – I am no connoisseur of Pakistan, Egypt or Nigeria which round out the top 4 but it isn’t hard to imagine a similar mindset.

It hasn’t been easy, but the economy has gotten itself back on the rails so quickly, the Government is now looking for 2021 growth of ~10%, that the Central Bank last week added another 50bps to interest rates which now stand at 3% versus 2% just a few months ago, more increases are expected in the early part of 2022 to avoid economic overheating. Alongside the GDP data there have been rapid improvements in Confidence, Retail Sales, Industrial Production, Energy Demand, Construction Indices and Imports – slowly but surely employment data is also finally improving.

We are still a long way from a utopian situation; if The Economist added in comparative poverty levels versus March 2020, Colombia would soon slide down the table, however the situation does feel relatively normal and there is a true sense of resilience to be found. Of course, the world of Omicron and politics are threatening to gatecrash the party at some juncture and it remains to be seen the impact they will both have but Colombia has shielded itself pretty well in terms of vaccinations and the hope is the 2022 elections will eventually provide a prudent President.

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That is about it for today – remember these are just themes that jump out at me – please refer to your local analyst, economist, salesperson or soothsayer for more details.

My regards to all,

Roops